Safe investment?
05/30/2015
Time and again we read "safe investment" in advertisements for classic cars. But how safe are the euros or francs that we invest in an old car? There are five threats to our investment:
a) Repairs and restorations that are not expected but do become necessary can wipe out the result of many years of value appreciation in a very short time, as it is well known that hardly any buyers will honor the full cost of a restoration or a necessary technical repair
b) Cars fall out of favor, are no longer "en vogue". Many pre-war vehicles are currently suffering from declining demand, but some English classics from the fifties and sixties have also seen better days. Even the very popular Mercedes roadster, the R107, has not seen a linear increase in value over the last few years, at least in certain markets
c) Economic fluctuations/recessions or financial crises can drag the entire market down. This not only affects classic cars but of course many other collectors' items and sometimes even real estate, but the past has shown that cars in particular suffer more than other investment objects
d) Changes in the environment can affect the usability, but also the tradability of old cars, e.g. environmental legislation or driving restrictions
e) Currency fluctuations can significantly shake up the value structure.
The order of the points has not been chosen at random; the risks involved in buying a classic car as an investment should be weighted pretty much in this order.
Anyone interested in further thoughts on the subject of buying a classic car will find more in the "Investment" topic channel ...
